The Comeback of Caterpillar, 1
Case Analysis Homework Assignment for Value ChainThe Comeback of Caterpillar, 1985-2001 The following is a value chain analysis for the case The Comeback of Caterpillar (CAT), 1985-2001. The initial step in conducting a value chain analysis is to divide CAT into primary activities and support activities. Then both activities are broken down into operational functions that are analyzed for strengths and weaknesses. This analysis will be using information from the case in the format from Figure 5-11. Under a policy of "shopping around the world," CAT purchased parts and components from low-cost suppliers who maintained high quality standards. The goal was to outsource 80% of the parts and components. This policy was set forth between 1985-1990. CAT also implemented the policy of branding. This is the practice of purchasing final products from smaller regional manufacturers, placing the CAT brand name on it, and selling them through the CAT distribution channels. This keeps production costs low while taking advantage of the CAT name and superior marketing organization. This policy first began in the mid 1980s.The case did not discuss the inbound logistics for the manufacturi
One of CAT's strategies is to concentrate on the markets of developing nations. The PWAF did not just imitate the Komatsu's, a key competitor, JIT manufacturing process but improved upon it to gain a competitive advantage. Fites's opposition to the UAW was ideological: it "is not so much a battle about economics as it is a battle about who's going to run the company. Operations Plant with a Future (PWAF) was a modernization program that combined just-in-time (JIT) inventory techniques, a factory automation scheme, a network of computerized machine tools, and a flexible manufacturing system. The National Labor Relations Board issued formal complaints against CAT, which were later dropped after a contract was agreed upon. In 1996 CAT established a computer network that connected 1,000 locations in 166 countries, which enhanced its already dominant delivery system in the industry. CAT has an open dialogue through the Partners in Quality program with the dealers for this reason. In 1990 CAT's world market share in the industry was 50%, which made CAT the industry leader. These all could be considered a weakness in service, however overall the service of CAT is a strength. R&D activities were more customer-driven this way, which is a strength. Overall the relations with the UAW are a weakness of CAT. CAT has a 48-hour guarantee delivery on parts anywhere in the world. Several strikes, work stoppages, slowdowns, picket lines, etc. In 1989 CAT had 50% higher sales and profits than Komatsu. George Schaefer, CEO from 1985-1990, significantly improved CAT's relation with the UAW after years of strikes and labor disputes.
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